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Interim financials results
Barclays Africa Group Limited
Authorised financial services and registered credit provider (NCRCP7)
Registration number: 1986/003934/06
Incorporated in the Republic of South Africa
JSE share code: BGA
ISIN: ZAE000174124
(Barclays Africa Group, BAGL or the Group)
Unaudited condensed consolidated financial results
for the interim reporting period ended 30 June 2015.
These unaudited condensed consolidated financial results were prepared by Barclays Africa Group
Limited Financial Control under the direction and supervision of the Deputy Chief Executive Officer
and Group Financial Director, D W P Hodnett CA(SA).
Date of publication: 29 July 2015
Profit and dividend announcement
for the reporting period ended
Salient features
• Diluted headline earnings per share ("HEPS") increased 11% to 797 cents.
• Declared a dividend per share ("DPS") of 450 cents, up 13%.
• Rest of Africa headline earnings grew 22% to R1,2bn and South Africa rose 8% to R5,5bn.
• Return on equity ("RoE") improved to 16,4% from 16,1%.
• Pre-provision profit increased 7% to R14,3bn.
• Revenue grew 6% to R32,4bn, as net interest income increased 7% and non-interest income rose 4%, while operating
expenses grew 5% to R18,1bn.
• Credit impairments fell 1% to R3,6bn, resulting in a 1,11% credit loss ratio from 1,18%.
• Barclays Africa Group Limited’s core equity tier 1 (CET1) capital ratio of 11,7% remains above regulatory requirements
and our board target range.
Overview of results
Barclays Africa Group Limited’s headline earnings increased 11% to R6 755m from R6 110m. Diluted HEPS also grew 11% to
797,0 cents from 720,7 cents. The Group’s RoE improved to 16,4% from 16,1%, comfortably above its 13,75% cost of equity ("CoE"),
due to its return on assets rising to 1,33% from 1,27%. Barclays Africa declared a 13% higher ordinary DPS of 450 cents, given
its strong CET1 and internal capital generation capacity. Net asset value ("NAV") per share increased 6% to 9 860 cents.
Pre-provision profit increased 7% to R14,3bn, which drove earnings growth. Non-interest revenue grew 4% and net
interest income 7%, as the Group’s net interest margin (on average interest-bearing assets) improved to 4,70% from 4,56%.
Loans and advances to customers grew 7% to R657bn, while deposits due to customers increased 8% to R649bn. The Group’s
cost-to-income ratio improved to 55,9% from 56,4% as operating expenses rose 5%. Credit impairments fell 1%, despite
improving non-performing loan (“NPL(s)”) cover and increasing portfolio provisions to 0,74% of performing loans from 0,70%.
NPLs declined to 4,0% of gross loans and advances to customers from 4,6%.
Retail and Business Banking ("RBB") headline earnings increased 17% to R4,7bn, as revenue growth exceeded cost growth and credit
impairments fell 8%. Wealth, Investment Management and Insurance ("WIMI") headline earnings increased 14% to R751m, with 48% growth
in Short-term Insurance SA, while Corporate and Investment Bank ("CIB") grew 3% to R1,9bn, including 9% higher Corporate earnings.
Revenue from Rest of Africa grew 9% (12% in constant currency) and headline earnings rose 22%, to contribute 20% and
18% of the total Group respectively.
Operating environment
Despite very low inflation, led by lower oil prices, global growth dipped in early 2015 as the US and Chinese
economies underperformed. In the second quarter the focus was on the US Federal Reserve policy and on Greece’s challenges.
Monetary policy actions varied widely across countries in developed and emerging markets. South Africa showed some sign
of recovery from 2014’s very low growth, but low export prices, acute electricity supply constraints and soft economic
confidence, meant that growth has been largely technical rather than structural. Household consumption accelerated in the
early months of the year, boosted by petrol price reductions and generally low inflation, although this impact has faded
as domestic fuel prices rose. Despite South Africa’s foreign trade deficit improving noticeably, the rand’s multi-year
depreciation against the US dollar continued. An environment of lower commodity prices and heightened market volatility
also impacted Barclays Africa markets outside South Africa, where there are signs of a slowdown and there is upward pressure
on interest rates in a number of countries.
Group performance
Statement of financial position
Total Group assets increased 6% to R1 039bn at 30 June 2015, predominantly due to 7% higher loans and advances to
customers and 7% growth in loans and advances to banks.
Loans and advances to customers
Gross loans and advances to customers increased 7% to R674bn. Excluding property-related loans, gross loans and advances
to customers grew 13%. Retail Banking South Africa’s gross loans rose 2% to R383bn, given 6% growth in credit cards
and 9% higher instalment credit agreements, while mortgages decreased 2%, in part due to a reduction in its legal book.
Business Banking South Africa’s gross loans rose 3% to R65bn, despite 6% lower Commercial Property Finance ("CPF"), as term
loans and agricultural loans grew 13% and 10% respectively. RBB Rest of Africa’s gross loans increased 9% to R38,6bn.
CIB’s gross loans increased 17% to R179bn, given strong growth in term loans, preference shares and reverse repurchase
agreements.
Funding
The Group maintained its strong liquidity position, growing deposits due to customers 8% to R649bn and improving its
loans-to-deposits ratio to 85,5% from 87,4%. Deposits due to customers contributed 79% to total funding from 78%. Retail
Banking South Africa maintained its leading market share, increasing deposits 12% to R156bn. Business Banking South
Africa’s deposits grew 10% to R102bn, with 30% higher savings and transmission deposits. CIB’s deposits increased 12%
to R238bn, given 17% higher cheque account deposits and 45% growth in foreign currency deposits.
Net asset value
The Group’s NAV rose 6% to R83,5bn, as it generated profits of R6,8bn in the period, from which it paid R4,4bn in
dividends. The Group’s NAV per share also grew 6% to 9 860 cents.
Capital to risk-weighted assets
Group risk-weighted assets (“RWA(s)”) increased 9% to R647bn at 30 June 2015, largely due to growth in loans and
advances to customers. The Group remains well capitalised, comfortably above regulatory requirements. Barclays Africa
Group Limited’s CET1 and Tier 1 capital adequacy ratios were 11,7% and 12,3% respectively (from 11,8% and 12,5%). The Group
generated 1,0% of CET1 internally during the period. Its total capital ratio was 14,1%, within the board target of 12,5% to
14,5%. Declaring a 13% higher interim DPS of 450 cents - a dividend cover of 1,8 times - was well considered, based on
the Group’s strong capital position, internal capital generation, strategy and growth plans.
Statement of comprehensive income
Net interest income
Net interest income increased 7% to R18 463m from R17 197m, with average interest-bearing assets growing 4%. The
Group’s net interest margin improved to 4,70% from 4,56%.
Loan mix and pricing had a 7 basis point (“bp(s)”) positive impact, due to improved pricing in Home Loans and Personal
and term loans. The deposit margin was unchanged, as the 4 bp negative pricing impact (largely higher liquidity
premiums) was offset by less reliance on more expensive wholesale funding.
Higher South African interest rates increased the endowment contribution on deposits and equity by 6 bps. Despite
releasing R586m to the income statement, the benefit from structural hedging declined 6 bps. The cash flow hedging reserve
decreased to R0,3bn debit after tax from a R0,2bn credit balance. Rest of Africa added 3 bps to the Group margin, given
its increased weighting, although its own margin declined. Changing the funding model for foreign currency loans added
11 bps to the total margin, partly offset by other items, including adverse prime-JIBAR movements.
Impairment losses on loans and advances
Credit impairments declined 1% to R3 550m from R3 568m, resulting in a 1,11% credit loss ratio from 1,18%. Total NPL
cover improved to 43,6% from 43,1%. Balance sheet portfolio provisions increased 14% to R4,8bn, or 0.74% of performing
loans from 0.70%. Group NPLs declined 8,4% to R26,8bn, or 4,0% of gross customer loans and advances from 4,6%.
RBB’s credit impairments fell 8% to R3,2bn, a 1,38% credit loss ratio from 1,55%. Retail Banking South Africa’s charge
declined 10% to R2,5bn, as significantly lower mortgage credit impairments outweighed a 12% rise in those of Vehicle
and Asset Finance (“VAF”).
Home Loans’ charge decreased 47% to R285m, a 0,25% credit loss ratio, given improved collections processes and the
high quality of new business written in recent years. Mortgage NPLs fell 22% or by R2,7bn to R9,5bn, 1.4% of gross loans.
NPL cover in mortgages decreased to 23,4% from 27,0%, as aged NPLs were written off. VAF's credit loss ratio was flat at
1,11%. Instalment credit agreements NPLs fell to 2,0% of gross loans and its NPL cover declined to 42,1%, due to
accelerating write offs of aged legal accounts, which reduced the NPL book’s average age.
Credit card’s charge decreased 2% to R1 332m from R1 353m, a 6,95% credit loss ratio from 7,63%. The Edcon portfolio’s
charge declined 18% to R572m, a 12,59% credit loss ratio from 15,01%. The credit loss ratio for the remainder of the
Card book remained within expectation, given the operating environment and seasoning of recent growth. Personal Loans’
credit loss ratio improved to 5,93% from 6,56% reflecting lending to lower risk existing customers and enhanced
collections.
Business Banking South Africa’s credit impairments fell 17% to R251m, a 0,81% credit loss ratio from 1,00%. A
significantly lower charge for CPF was the driver. NPLs fell 31% to R3,2bn or 0.48% of gross loans. Performing loan cover
increased further to 1,16%. RBB Rest of Africa’s credit impairments rose 15%, increasing its credit loss ratio to 2,31%
from 2,23%. Its NPLs fell 12% to R2,9bn, while performing loan cover decreased to 1,08% since December 2014. CIB’s credit
impairments increased >100% off a low base to R238m, reflecting loan book growth and deterioration in some sectors. NPLs
rose 118% to R2,2bn, while portfolio provisions increased to 0,26% of performing loans.
Non-interest income
Non-interest income increased 4% to R13 960m from R13 487m accounting for 43% of total income. Rest of Africa grew 11%
to R2,3bn, despite rand appreciation, exceeding South Africa’s 2% increase to R11,7bn. Net fee and commission income
rose 6% to R9,8bn, with double digit growth in cheque accounts, credit cards and electronic banking. Merchant income
decreased 3% to R841m due to the recent industry interchange amendments, while Trust and other fiduciary services was
flat at R711m and investment banking fees increased 27% to R194m.
RBB’s non-interest income grew 6% to R8,8bn, 63% of the total. Retail Banking in South Africa increased 3% to R6,0bn
with customer numbers growing 2%. Card non-interest income was flat, despite 12% growth in acquiring volumes. New
interchange rules reduced revenue by R74m in the period. Continued migration to bundled products dampened non-interest income
income growth. Business Banking’s non-interest income grew 12% to R1,7bn, largely due to 14% higher cheque account income and
9% growth in electronic banking income. Enhanced digital functionality limited cash-related transaction income growth to
3%, while cheque payment volume fell 22%. RBB Rest of Africa’s non-interest income rose 9% to R1,2bn, driven by increased
transaction and card acquiring volumes.
WIMI’s non-interest income increased 8% to R2,5bn, with improving 7% growth in South Africa and a 34% rise in the Rest
of Africa. Net life premiums grew 3%, while short-term insurance increased 5%.
CIB’s non-interest income decreased 15% to R2.8bn, largely due to a change in its funding model for foreign currency
loans which reduced hedging revenue and R180m of negative revaluations in Private Equity. Overall Markets net revenue
(including net interest income) grew 1% to R2,1bn. Fixed Income and Credit revenues declined 13%. Rest of Africa grew 27%
and Equities and Prime Services rose 44%. Foreign Exchange and Commodities revenue in South Africa fell 25%, reflecting
subdued client activity and margin pressure.
Operating expenses
Operating expenses grew 5% to R18 129m from R17 297m. Rand appreciation reduced the increase by 1%. South African costs
grew 5%, while Rest of Africa increased 8% in constant currency given continued investment spend. Staff costs rose 10%
to R10,0bn to account for 55,5% of total expenses. Salaries grew 8% due to higher wage increases for entry level employees
and hiring in specialist areas such as IT. Incentives rose 20%, largely due to share-based payments increasing 26% given
the Group’s higher share price. Other staff costs increased 48%, with higher staff mobility costs and increased redundancy
costs.
Non-staff costs declined 1% to R8,1bn, as efficiency initiatives enabled continued investment. Property-related costs
decreased 6% to R2,6bn, reflecting portfolio optimisation and lower dilapidation costs. Total IT-related costs increased
9% to R3 134m, 17% of overall costs. Depreciation declined 5% and amortisation of intangible assets decreased 6% driven
by impairments in the second half of 2014. Marketing costs grew 23% to R722m, given increased product advertising.
Professional fees and communication costs increased 6% and 8% respectively.
RBB, CIB and WIMI’s operating expenses increased 4% to R13,4bn, 5% to R3,5bn and 6% to R1,5bn respectively. In South
Africa, RBB, CIB and WIMI’s costs rose 3%, 6% and 5% respectively. Retail Banking South Africa’s operating expenses grew
3%, driven by operational efficiencies and managing discretionary costs. Despite investing in relationship managers,
Business Banking South Africa’s cost growth was also contained to 3%, reflecting customers migrating to electronic channels
and internal cost efficiencies. RBB Rest of Africa’s constant currency costs grew 8% despite strategic investments,
restructuring costs and inflationary pressures.
Taxation
The Group’s taxation expense increased 7% to R2 907m, slightly less than the 9% growth in pre-tax profit, resulting in
a 28,6% effective tax rate from 29,2%.
Segment performance
Group earnings remain well diversified by business and product line. RBB accounted for 63,4% of Group headline
earnings excluding head office, eliminations and other central items. CIB contributed 26,4% and WIMI 10,2%.
Retail Banking South Africa
Headline earnings grew 16% to R3 136m as pre-provision profits increased 5% and credit impairments declined 10%. In
the current period more central retail costs were allocated out to business units, resulting in a restatement of prior
year comparatives. Home Loans’ earnings increased 29% to R935m, as credit impairments fell 47%, costs grew 1% and its
net interest margin improved. VAF’s 6% earnings decrease to R450m reflected 11% loan growth offset by 12% higher credit
impairments and some margin compression. Card earnings rose 13% to R642m, largely due to smaller losses in the Edcon
portfolio, flat costs and 2% lower credit impairments. Personal Loans earnings increased significantly to R122m, given a
wider margin, lower costs and 11% lower credit impairments. Transactional and Deposits earnings grew 13% to R1 228m as
improved 8% revenue growth exceeded 5% cost growth. Losses in the ‘Other’ segment, which is largely central costs, increased
90% to R241m due to higher central funding costs. Retail Banking South Africa contributed 43% of Group headline earnings
excluding Head Office, Treasury and other operations.
Business Banking South Africa
Headline earnings increased 22% to R1 056m, reflecting 20% growth in Business Banking excluding equities and a 52%
lower loss in its non-core equity portfolio. Non-interest income growth of 14%, well ahead of 4% cost growth, saw
Business Banking excluding equities increase pre-provision profit 11%, despite 3% net interest income growth. Lower
credit impairments also contributed to earnings. Business Banking South Africa accounted for 14% of Group earnings
excluding Head Office, Treasury and other operations.
Retail and Business Banking Rest of Africa
Headline earnings increased 15% to R460m, as 10% pre-provision profit growth and lower tax expenses outweighed 6%
currency depreciation and 15% higher credit impairments. RBB Rest of Africa accounted for 6% of Group headline earnings
excluding Head Office, Treasury and other operations.
Corporate and Investment Bank
Headline earnings rose 3% to R1 938m, or 9% excluding negative fair value adjustments in the non-core Private Equity
portfolio. Revenue grew 5%, in line with costs, while its credit loss ratio increased to 0,28% from 0,09% and its
taxation expense fell 16%. Corporate headline earnings grew 9% to R933m and Investment Bank’s declined 2% to R1 005m.
Corporate’s revenue grew 7% to R3,4bn and Investment Banking 2% to R3,1bn. South African earnings decreased 2%, while Rest
of Africa grew 12% to account for 38% of CIB earnings. Higher credit impairments and Private Equity losses reduced CIB’s
return on regulatory capital to 18,1% from 20,4%.
Wealth, Investment Management and Insurance
Headline earnings increased 14% to R751m, while net operating income increased 9% to R906m. Life Insurance headline
earnings grew 7% to R394m, with 3% higher net premium income. Reducing pricing outside South Africa this year impacted
Life’s embedded value of new business, which decreased 23%. Its return on embedded value was 23,0%. Wealth and Investment
Management’s headline earnings decreased 7% to R214m as costs grew 15% given continued investment in people and systems.
Short-term Insurance earnings increased 44% to R115m due to improved underwriting margins and 69% higher net and operating
income in the Rest of Africa. Fiduciary Services earnings grew 23% to R70m, while Distribution broke even in the half. Rest
of Africa headline earnings grew 76% to R60m and South Africa increased 10% to R691m. WIMI’s RoE increased to 25,6% from 23,1%.
Prospects
We expect full-year global growth of 3,3%, slightly below 2014. Notwithstanding the Greece scare, we expect Europe’s
recovery to remain on track, and for developed country growth to lead the way while Emerging Markets, led by China,
lag somewhat. We expect moderately higher inflation and for the much awaited US Federal Reserve “lift-off” to commence.
One of South Africa’s key risks is the potential for further protracted electricity supply constraints. Despite modest
economic growth, we believe that headline inflation is likely to move higher into year-end, which together with the global
environment, is likely to trigger modest interest rate increases. We expect full-year growth in SA of just 2% this year.
In Barclays Africa’s other markets, we expect growth to slip to 5,1% from 5,3% as many of the economies need to tighten
fiscal and monetary policy and commodity prices impact underlying finances.
With South African interest rates likely to rise another 25 bps this year, we expect the Group’s net interest margin
to widen slightly from 2014’s. We expect mid-single digit loan growth, with CIB’s faster than RBB’s. Focus on revenue
growth and continued cost management should improve the Group’s cost-to-income ratio. Our credit loss ratio should
improve from the first half’s, reflecting normal seasonality, to a level similar to 2014’s 1,02%. These factors should
increase our RoE further in 2015. Rest of Africa’s earnings growth is likely to exceed South Africa’s this year.
Basis of presentation
The Group’s interim financial results have been prepared in accordance with the recognition and measurement requirements
of International Financial Reporting Standards (“IFRS”), interpretations issued by the IFRS Interpretations Committee
(“IFRS-IC”), the South African Institute of Chartered Accountants Financial Reporting Guides as issued by the Accounting
Practices Committee, Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the
Listings Requirements and the requirements of the Companies Act. The principal accounting policies applied are set out
in the Group’s most recent annual consolidated financial statements.
The Group’s unaudited condensed consolidated interim financial statements comply with IAS 34 - Interim Financial
Reporting (“IAS 34”).
The preparation of financial information requires the use of estimates and assumptions about future conditions. Use of
available information and application of judgement are inherent in the formation of estimates. The accounting policies
that are deemed critical to the Group’s results and financial position, in terms of the materiality of the items to
which the policies are applied, and which involve a high degree of judgement including the use of assumptions and
estimation, are impairment of loans and advances, goodwill impairment, fair value measurements, impairment of available-for-sale
financial assets, consolidation of structured or sponsored entities, post-retirement benefits, provisions, income taxes,
share-based payments, liabilities arising from claims made under short-term insurance contracts, liabilities arising
from claims made under life insurance contracts and offsetting of financial assets and liabilities.
Events after the reporting period
The directors are not aware of any events occurring between the reporting date of 30 June 2015 and the date of
authorisation of these unaudited condensed consolidated interim financial results as defined in IAS 10 - Events after
the Reporting Period ("IAS 10").
On behalf of the board
W E Lucas-Bull M Ramos
Group Chairman Chief Executive Officer
Johannesburg
29 July 2015
Declaration of interim ordinary dividend number 58
Shareholders are advised that an interim ordinary dividend of 450 cents per ordinary share was declared today, 29 July
2015, for the period ended 30 June 2015. The ordinary dividend is payable to shareholders recorded in the register of members
of the Company at the close of business on 11 September 2015. The directors of Barclays Africa Group Limited confirm that the
Group will satisfy the solvency and liquidity test immediately after completion of the dividend distribution.
The dividend will be subject to local dividends withholding tax at a rate of 15%. In accordance with paragraphs
11.17(a)(i) to (x) and 11.17(c) of the JSE Listings Requirements, the following additional information is disclosed:
• The dividend has been declared out of income reserves.
• The local dividend tax rate is fifteen percent (15%).
• The gross local dividend amount is 450 cents per ordinary share for shareholders exempt from the dividend tax.
• The net local dividend amount is 382,50 cents per ordinary share for shareholders liable to pay the dividend tax.
• Barclays Africa Group Limited currently has 847 750 679 ordinary shares in issue (includes 880 000 treasury
shares).
• Barclays Africa Group Limited’s income tax reference number is 9150116714.
In compliance with the requirements of Strate, the electronic settlement and custody system used by the JSE Limited,
the following salient dates for the payment of the dividend are applicable:
Last day to trade cum dividend Friday, 4 September 2015
Shares commence trading ex dividend Monday, 7 September 2015
Record date Friday, 11 September 2015
Payment date Monday, 14 September 2015
Share certificates may not be dematerialised or rematerialised between Monday, 7 September 2015 and Friday, 11 September 2015,
both dates inclusive. On Monday, 14 September 2015, the dividend will be electronically transferred to the bank accounts of
certificated shareholders.
The accounts of those shareholders who have dematerialised their shares (which are held at their participant or broker) will
also be credited on Monday, 14 September 2015.
On behalf of the board
N R Drutman
Group Company Secretary
Johannesburg
29 July 2015
Barclays Africa Group Limited is a company domiciled in South Africa. Its registered office is 7th Floor, Barclays
Towers West, 15 Troye Street, Johannesburg, 2001.
Consolidated salient features
for the reporting period ended
30 June 31 December
2015 2014(2) 2014
Statement of comprehensive income (Rm)
Revenue 32 423 30 684 63 125
Operating expenses 18 129 17 297 35 848
Profit attributable to ordinary equity holders 6 770 6 166 13 216
Headline earnings(1) 6 755 6 110 13 032
Statement of financial position
Loans and advances to customers (Rm) 657 412 615 540 636 326
Total assets (Rm) 1 038 945 978 701 991 414
Deposits due to customers (Rm) 649 226 598 453 624 886
Loans-to-deposits and debt securities ratio (%) 85,5 87,4 87,1
Financial performance (%)
Return on average equity 16,4 16,1 16,7
Return on average assets 1,33 1,27 1,33
Return on average risk-weighted assets 2,16 2,14 2,22
Operating performance (%)
Net interest margin on average interest-bearing assets 4,70 4,56 4,65
Impairment losses ratio 1,11 1,18 1,02
Non-performing loans ratio 3,97 4,62 4,19
Non-interest income as % of revenue 43,1 44,0 43,6
Cost-to-income ratio 55,9 56,4 56,8
Jaws 0,86 (1,59) (1,00)
Effective tax rate, excluding indirect taxation 28,6 29,2 28,3
Share statistics (million)
Number of ordinary shares in issue 847,8 847,8 847,8
Number of ordinary shares in issue (excluding treasury shares) 846,9 846,9 846,9
Weighted average number of ordinary shares in issue (excluding treasury shares) 846,9 847,5 847,1
Diluted weighted average number of ordinary shares in issue (excluding treasury shares) 847,6 847,8 847,6
Share statistics (cents)
Headline earnings per ordinary share 797,6 720,9 1 538,4
Diluted headline earnings per ordinary share 797,0 720,7 1 537,5
Basic earnings per ordinary share 799,4 727,6 1 560,1
Diluted basic earnings per ordinary share 798,7 727,3 1 559,2
Dividends per ordinary share relating to income for the reporting period 450 400 925
Dividend cover (times) 1,8 1,8 1,7
Net asset value per ordinary share 9 861 9 261 9 764
Tangible net asset value per ordinary share 9 495 8 887 9 384
Capital adequacy (%)
Barclays Africa Group Limited 13,8 14,6 14,4
Absa Bank Limited 12,8 13,9 13,7
Common Equity Tier 1 (%)
Barclays Africa Group Limited 11,4 11,8 11,9
Absa Bank Limited 9,8 10,1 10,6
Notes
(1)After allowing for R159m (30 June 2014: R147m; 31 December 2014: R305m) profit attributable to
preference equity holders.
(2)Restated, refer to note 14 for reporting changes.
Condensed consolidated statement of financial position
as at
30 June 31 December
2015 2014(1) 2014
Note Rm Rm Rm
Assets
Cash, cash balances and balances with central banks 46 224 44 589 50 335
Investment securities 78 966 82 527 85 886
Loans and advances to banks 93 535 87 254 72 225
Trading portfolio assets 89 426 86 577 90 498
Hedging portfolio assets 2 106 2 512 2 350
Other assets 32 132 19 462 15 514
Current tax assets 1 354 532 381
Non-current assets held for sale 1 949 1 290 972
Loans and advances to customers 657 412 615 540 636 326
Reinsurance assets 467 736 731
Investments linked to investment contracts 19 025 20 975 19 317
Investments in associates and joint ventures 901 775 845
Investment properties 751 778 727
Property and equipment 11 404 10 689 11 177
Goodwill and intangible assets 3 095 3 168 3 219
Deferred tax assets 1 198 1 297 911
Total assets 1 038 945 978 701 991 414
Liabilities
Deposits from banks 51 041 64 768 52 977
Trading portfolio liabilities 48 324 46 155 49 772
Hedging portfolio liabilities 2 432 2 512 2 577
Other liabilities 34 313 28 886 21 079
Provisions 1 986 1 951 2 943
Current tax liabilities 151 167 54
Non-current liabilities held for sale 1 468 504 372
Deposits due to customers 649 226 598 453 624 886
Debt securities in issue 119 544 105 509 106 098
Liabilities under investment contracts 22 706 24 700 23 299
Policyholder liabilities under insurance contracts 3 651 2 574 3 871
Borrowed funds 2 11 476 14 889 11 208
Deferred tax liabilities 1 768 1 351 1 333
Total liabilities 947 086 892 419 900 469
Equity
Capital and reserves
Attributable to ordinary equity holders:
Share capital 1 694 1 694 1 694
Share premium 4 531 4 509 4 548
Retained earnings 72 407 66 814 70 237
Other reserves 4 875 5 412 6 211
83 507 78 429 82 690
Non-controlling interest - ordinary shares 3 708 3 209 3 611
Non-controlling interest - preference shares 4 644 4 644 4 644
Total equity 91 859 86 282 90 945
Total liabilities and equity 1 038 945 978 701 991 414
Note
(1)Restated, refer to note 14 for reporting changes.
Condensed consolidated statement of comprehensive income
for the reporting period ended
30 June 31 December
2015 2014 2014
Note Rm Rm Rm
Net interest income 18 463 17 197 35 601
Interest and similar income 34 551 31 850 65 646
Interest expense and similar charges (16 088) (14 653) (30 045)
Non-interest income 13 960 13 487 27 524
Net fee and commission income 9 845 9 259 18 667
Fee and commission income 11 285 10 683 21 598
Fee and commission expense (1 440) (1 424) (2 931)
Net insurance premium income 2 981 2 991 6 014
Net claims and benefits incurred on insurance contracts (1 467) (1 506) (3 044)
Changes in investment and insurance contract liabilities (35) (765) (752)
Gains and losses from banking and trading activities 1 987 2 385 4 373
Gains and losses from investment activities 293 926 1 133
Other operating income 356 197 1 133
Total income 32 423 30 684 63 125
Impairment losses on loans and advances (3 550) (3 568) (6 290)
Operating income before operating expenditure 28 873 27 116 56 835
Operating expenses (18 129) (17 297) (35 848)
Other expenses (639) (583) (1 412)
Other impairments 3 (16) (25) (429)
Indirect taxation (623) (558) (983)
Share of post-tax results of associates and joint ventures 71 71 142
Operating profit before income tax 10 176 9 307 19 717
Taxation expense (2 907) (2 714) (5 573)
Profit for the reporting period 7 269 6 593 14 144
Profit attributable to:
Ordinary equity holders 6 770 6 166 13 216
Non-controlling interest - ordinary shares 340 280 623
Non-controlling interest - preference shares 159 147 305
7 269 6 593 14 144
Earnings per share
Basic earnings per ordinary share (cents) 799,4 727,6 1 560,1
Diluted basic earnings per ordinary share (cents) 798,7 727,3 1 559,2
Condensed consolidated statement of comprehensive income
for the reporting period ended
30 June 31 December
2015 2014 2014
Rm Rm Rm
Profit for the reporting period 7 269 6 593 14 144
Other comprehensive income
Items that will not be reclassified to profit or loss
Movement in retirement benefit fund assets and liabilities (30) 40 62
Increase in retirement benefit surplus 4 20 149
(Decrease)/increase in retirement benefit deficit (28) 21 (86)
Deferred tax (6) (1) (1)
Total items that will not be reclassified to profit or loss (30) 40 62
Items that are or may be subsequently reclassified to profit or loss
Foreign exchange differences on translation of foreign operations (938) (726) (199)
Movement in cash flow hedging reserve (616) (253) (251)
Fair value (losses)/gains arising during the reporting period (207) 320 1 094
Amount removed from other comprehensive income and recognised in profit or loss (648) (671) (1 443)
Deferred tax 239 98 98
Movement in available-for-sale reserve 93 (211) (67)
Fair value losses arising during the reporting period (11) (333) (142)
Amortisation of government bonds - release to profit or loss 101 3 44
Deferred tax 3 119 31
Total items that are or may be subsequently reclassified to profit or loss (1 461) (1 190) (517)
Total comprehensive income for the reporting period 5 778 5 443 13 689
Total comprehensive income attributable to:
Ordinary equity holders 5 368 5 062 12 682
Non-controlling interest - ordinary shares 251 234 702
Non-controlling interest - preference shares 159 147 305
5 778 5 443 13 689
Condensed consolidated statement of changes in equity
for the reporting period ended
30 June
2015(1)
Total
equity Non- Non-
attributable controlling controlling
to ordinary interest - interest -
equity ordinary preference Total
holders shares shares equity
Rm Rm Rm Rm
Balance at the beginning of the reporting period 82 690 3 611 4 644 90 945
Total comprehensive income 5 368 251 159 5 778
Profit for the reporting period 6 770 340 159 7 269
Other comprehensive income (1 402) (89) - (1 491)
Dividends paid during the reporting period (refer to note 5) (4 443) (330) (159) (4 932)
Purchase of Group shares in respect of equity-settled share-based
payment arrangements (5) - - (5)
Elimination of movement in treasury shares held by Group entities (18) - - (18)
Movement in share-based payment reserve 69 - - 69
Transfer from share-based payment reserve (1) - - (1)
Transfer to share capital and share premium 1 - - 1
Value of employee services 69 - - 69
Movement in general credit risk reserve - - - -
Transfer from general credit risk reserve (96) - - (96)
Transfer to retained earnings 96 - - 96
Movement in foreign insurance subsidiary regulatory reserve - - - -
Transfer from foreign insurance subsidiary regulatory reserve (6) - - (6)
Transfer to retained earnings 6 - - 6
Share of post-tax results of associates and joint ventures - - - -
Transfer from retained earnings (71) - - (71)
Transfer to associates’ and joint ventures’ reserve 71 - - 71
Disposal of interest in a subsidiary(2) (154) 176 - 22
Balance at the end of the reporting period 83 507 3 708 4 644 91 859
Notes
(1)All movements are reflected net of taxation.
(2)The Group disposed of its interest in National Bank of Commerce, reducing its interest from 65,89% to 55%.
Condensed consolidated statement of changes in equity
for the reporting period ended
30 June
2014(1)
Total
equity Non- Non-
attributable controlling controlling
to ordinary interest - interest -
equity ordinary preference Total
holders shares shares equity
Rm Rm Rm Rm
Balance at the beginning of the reporting period 77 317 3 240 4 644 85 201
Total comprehensive income for the reporting period 5 062 234 147 5 443
Profit for the reporting period 6 166 280 147 6 593
Other comprehensive income (1 104) (46) - (1 150)
Dividends paid during the reporting period (refer to note 5) (3 981) (217) (147) (4 345)
Purchase of Group shares in respect of equity-settled share-based
payment schemes (40) - - (40)
Elimination of the movement in treasury shares held by Group entities 53 - - 53
Movement in share-based payment reserve 18 - - 18
Transfer from share-based payment reserve (21) - - (21)
Transfer to share capital and share premium 21 - - 21
Value of employee services 18 - - 18
Movement in general credit risk reserve - - - -
Transfer from retained earnings (29) - - (29)
Transfer to credit risk reserve 29 - - 29
Movement in foreign insurance subsidiary regulatory reserve - - - -
Transfer from retained earnings (4) - - (4)
Transfer to foreign insurance subsidiary regulatory reserve 4 - - 4
Share of post-tax results of associates and joint ventures - - - -
Transfer from retained earnings (71) - - (71)
Transfer to associates’ and joint ventures’ reserve 71 - - 71
Disposal of subsidiary(2) - (48) - (48)
Balance at the end of the reporting period 78 429 3 209 4 644 86 282
Notes
(1)All movements are reflected net of taxation.
(2)The Group sold its investment in a non-core subsidiary on 2 January 2014 and the subsidiary has been derecognised.
Condensed consolidated statement of changes in equity
for the reporting period ended
31 December
2014(1)
Total
equity Non- Non-
attributable controlling controlling
to ordinary interest - interest -
equity ordinary preference Total
holders shares shares equity
Rm Rm Rm Rm
Balance at the beginning of the reporting period 77 317 3 240 4 644 85 201
Total comprehensive income 12 682 702 305 13 689
Profit for the reporting period 13 216 623 305 14 144
Other comprehensive income (534) 79 - (455)
Dividends paid during the reporting period (refer to note 5) (7 365) (311) (305) (7 981)
Purchase of Group shares in respect of equity-settled share-based
payment arrangements (46) - - (46)
Elimination of movement in treasury shares held by Group entities 96 - - 96
Movement in share-based payment reserve 34 - - 34
Transfer from share-based payment reserve (23) - - (23)
Transfer to share capital and share premium 23 - - 23
Value of employee services 34 - - 34
Movement in general credit risk reserve - - - -
Transfer from retained earnings (157) - - (157)
Transfer to general credit risk reserve 157 - - 157
Movement in foreign insurance subsidiary regulatory reserve - - - -
Transfer from retained earnings (4) - - (4)
Transfer to foreign insurance subsidiary regulatory reserve 4 - - 4
Share of post-tax results of associates and joint ventures - - - -
Transfer from retained earnings (142) - - (142)
Transfer to associates’ and joint ventures’ reserve 142 - - 142
Disposal of subsidiary(2) - (48) - (48)
Transfer to non-controlling interest (28) 28 - -
Balance at the end of the reporting period 82 690 3 611 4 644 90 945
Notes
(1)All movements are reflected net of taxation.
(2)The Group sold its investment in a non-core subsidiary on 2 January 2014 and the subsidiary has been derecognised.
Condensed consolidated statement of cash flows
for the reporting period ended
30 June 31 December
2015 2014(1) 2014
Note Rm Rm Rm
Net cash generated from operating activities 3 176 4 763 18 233
Net cash utilised in investing activities (939) (3 400) (5 462)
Net cash utilised in financing activities (4 633) (5 840) (12 055)
Net (decrease)/increase in cash and cash equivalents (2 396) (4 477) 716
Cash and cash equivalents at the beginning of the reporting period 1 16 626 15 854 15 854
Effect of foreign exchange rate movements on cash and cash equivalents (284) (166) 56
Cash and cash equivalents at the end of the reporting period 2 13 946 11 211 16 626
Notes to the condensed consolidated statement of cash flows
1. Cash and cash equivalents at the beginning of the reporting period
Cash, cash balances and balances with central banks(2) 12 903 12 653 12 653
Loans and advances to banks(3) 3 723 3 201 3 201
16 626 15 854 15 854
2. Cash and cash equivalents at the end of the reporting period
Cash, cash balances and balances with central banks(2) 9 833 8 497 12 903
Loans and advances to banks(3) 4 113 2 714 3 723
13 946 11 211 16 626
Notes
(1)Restated, refer to note 14 for reporting changes.
(2)Includes coins and bank notes.
(3)Includes call advances, which are used as working capital by the Group and are a component of other advances within
“Loans and advances to banks”.
Condensed notes to the consolidated financial results
for the reporting period ended
1. Non-current assets and non-current liabilities held for sale
During the current reporting period the Group effected the following changes to non-current assets and non-current
liabilities held for sale:
In the CPF division within RBB, investment properties with a carrying value of R71m and investment securities with a
carrying value of R14m were disposed of.
In the WIMI division there was a decrease in the net assets of R34m.
2. Borrowed funds
During the reporting period, R2 500m (30 June 2014: Rnil; 31 December 2014: R531m) of subordinated notes were issued and
R2 200m (30 June 2014: R1 725m; 31 December 2014: R4 966m) were redeemed.
3. Other impairments
30 June 31 December
2015 2014 2014
Rm Rm Rm
Financial instruments (11) 9 20
Other 27 16 409
Goodwill 1 - 1
Intangible assets 25 - 146
Investments in associates and joint ventures - - 2
Property and equipment 1 16 260
16 25 429
4. Headline earnings
30 June 31 December
2015 2014 2014
Gross Net(1) Gross Net(1) Gross Net(1)
Rm Rm Rm Rm Rm Rm
Headline earnings is determined as follows:
Profit attributable to ordinary equity holders 6 770 6 166 13 216
Total headline earnings adjustment: (15) (56) (184)
IFRS 3 - Goodwill impairment 1 1 - - 1 1
IFRS 5 - Gains on disposal of non-current assets held for sale (1) (1) (42) (34) (97) (86)
IAS 16 - Profit on disposal of property and equipment (3) (3) (16) (13) (19) (15)
IAS 21 - Recycled foreign currency translation reserve (90) (90) - - (397) (397)
IAS 27 - Profit on disposal of subsidiary - - (44) (35) (44) (35)
IAS 28 - Impairment of investments in associates and joint ventures - - - - 2 2
IAS 36 - Impairment of property and equipment 1 1 16 12 260 189
IAS 36 and IAS 38 - Loss on disposal and impairment of intangible assets 19 13 - - 148 107
IAS 39 - Release of available-for-sale reserves 101 73 3 2 44 31
IAS 40 - Change in fair value of investment properties (9) (9) 12 12 18 19
Headline earnings/diluted headline earnings 6 755 6 110 13 032
Headline earnings per share (cents) 797,6 720,9 1 538,4
Diluted headline earnings per share (cents) 797,0 720,7 1 537,5
Note
(1)The net amount is reflected after taxation and non-controlling interest.
5. Dividends per share
30 June 31 December
2015 2014 2014
Rm Rm Rm
Dividends declared to ordinary equity holders
Interim dividend (29 July 2015: 450 cents) (30 July 2014: 400 cents) 3 815 3 391 3 391
Final dividend (3 March 2015: 525 cents) - - 4 451
3 815 3 391 7 842
Dividends declared to non-controlling preference equity holders
Interim dividend (29 July 2015: 3 282,8082 cents) (30 July 2014: 3 197,4658 cents) 162 158 158
Final dividend (3 March 2015: 3 210,8904 cents) - - 159
162 158 317
Dividends paid to ordinary equity holders
Final dividend net of treasury shares (3 March 2015: 525 cents) (11 February 2014: 470 cents) 4 443 3 981 3 981
Interim dividend net of treasury shares (30 July 2014: 400 cents) - - 3 384
4 443 3 981 7 365
Dividends paid to non-controlling preference equity holders
Final dividend (3 March 2015: 3 210,8904 cents) (11 February 2014: 2 979,3151 cents) 159 147 147
Interim dividend (30 July 2014: 3 197,4658 cents) - - 158
159 147 305
6. Acquisitions and disposals of businesses and other similar transactions
Acquisitions and disposals of businesses during the current reporting period
There were no acquisitions and disposals of businesses during the current reporting period.
7. Related parties
There were no one-off significant transactions with related parties of the Group during the current and previous reporting period.
8. Financial guarantee contracts
30 June 31 December
2015 2014(1) 2014
Rm Rm Rm
Financial guarantee contracts 96 96 96
Financial guarantee contracts represent contracts where the Group undertakes to make specified payments to a counterparty, should the
counterparty suffer a loss as a result of a specified debtor failing to make payment when due in accordance with the terms of a debt
instrument. This amount represents the maximum off-statement of financial position exposure.
(1)During the previous reporting period, all financial guarantee contracts were reassessed and as a consequence the disclosure has been
refined. The comparatives have been restated from R78m to R96m.
9. Commitments
30 June 31 December
2015 2014 2014
Rm Rm Rm
Authorised capital expenditure
Contracted but not provided for 2 950 739 1 675
The Group has capital commitments in respect of computer equipment and property development.
Management is confident that future net revenue and funding will be sufficient to cover
these commitments.
Operating lease payments due
No later than one year 813 798 856
Later than one year and no later than five years 1 865 1 253 1 631
Later than five years 1 324 178 709
4 002 2 229 3 196
The operating lease commitments comprise a number of separate operating leases in relation
to property and equipment, none of which is individually significant to the Group. Leases
are negotiated for an average term of three to five years and rentals are renegotiated annually.
Sponsorship payments due
No later than one year 213 273 282
Later than one year and no later than five years 536 468 307
749 741 589
The Group has sponsorship commitments in respect of sports, arts and culture.
Other commitments
No later than one year 991 - 991
The South African Reserve Bank (“SARB”) announced in August 2014 that African Bank Investments
Limited (“ABIL”) would be placed under curatorship. A consortium of six South African banks
(including Barclays Africa Group Limited) and the Public Investment Corporation (“PIC”) have
underwritten R5bn respectively. 50% of the amount underwritten by the banks is guaranteed by
the SARB, of which Barclays Africa Group Limited committed R991m (pre the SARB guarantee).
The value of the amount to be underwritten was determined with reference to the respective
underwriter’s proportion of total Tier 1 capital of the consortium as at 30 June 2014.
10. Contingencies
30 June 31 December
2015 2014(1) 2014
Rm Rm Rm
Guarantees 35 080 24 991 34 011
Irrevocable debt facilities 142 302 119 954 125 334
Irrevocable equity facilities 368 387 366
Letters of credit 7 301 6 196 4 827
Other contingencies 4 502 5 040 3 774
189 553 156 568 168 312
Guarantees include performance and payment guarantee contracts.
Irrevocable facilities are commitments to extend credit where the Group does not have the right
to immediately terminate the facilities by written notice. Commitments generally have fixed expiry
dates. Since commitments may expire without being drawn upon, the total contract amounts do not
necessarily represent future cash requirements.
Note
(1)In the previous reporting period, terms and conditions associated with unutilised customer
facilities were reviewed and confirmed to be irrevocable in nature. These facilities were
previously reported as R77bn and have been restated to R120bn.
Legal proceedings
The Group is engaged in various litigation proceedings involving claims by and against it, which
arise in the ordinary course of business. The Group does not expect the ultimate resolution of any
proceedings, to which the Group is party, to have a significant adverse effect on the financial
statements of the Group. Provision is made for all liabilities which are expected to materialise.
Regulatory matters
The scale of regulatory change remains challenging and the global financial crisis is resulting in
a significant tightening of regulation and changes to regulatory structures globally, especially
for companies that are deemed to be of systemic importance. Concurrently, there is continuing
political and regulatory scrutiny of the operation of the banking and consumer credit industries
globally which, in some cases, is leading to increased regulation. The nature and impact of future
changes in the legal framework, policies and regulatory action cannot currently be fully predicted
and are beyond the Group’s control, but especially in the area of banking and insurance regulation,
are likely to have an impact on the Group’s businesses and earnings. The Group is continuously
evaluating its compliance programmes and controls in general. As a consequence of these compliance
programmes and controls, including monitoring and review activities, the Group has also adopted
appropriate remedial and/or mitigating steps, where necessary or advisable, and made disclosures
on material findings as and when appropriate.
Income taxes
The Group is subject to income taxes in numerous jurisdictions and the calculation of the Group’s
tax charge and worldwide provisions for income taxes necessarily involves a degree of estimation
and judgement. There are many transactions and calculations for which the ultimate tax treatment
is uncertain or in respect of which the relevant tax authorities may have indicated disagreement
with the Group’s treatment and accordingly the final tax charge cannot be determined until resolution
has been reached with the relevant tax authority. The Group recognises liabilities for anticipated
tax audit issues based on estimates of whether additional taxes will be due after taking into account
expert external advice where appropriate. Where the final tax outcome of these matters is different
from the amounts that were initially recorded, such differences will impact the current and deferred
income tax assets and liabilities in the reporting period in which such determination is made. These
risks are managed in accordance with the Group’s Tax Risk Framework.
11. Segment reporting
30 June 31 December
2015 2014(1) 2014(1)
Rm Rm Rm
11.1 Headline earnings contribution by segment
RBB 4 652 3 969 8 524
CIB 1 938 1 883 3 735
WIMI 751 661 1 324
Head Office, Treasury and other operations (586) (403) (551)
6 755 6 110 13 032
Note
(1)Operational changes, management changes and associated changes to the way in which the Chief Operating
Decision Maker (“CODM”) views the performance of each business segment, have resulted in the reallocation
of earnings, assets and liabilities between operating segments. For details on business portfolio changes,
refer to the interim financial results booklet available on www.barclaysafrica.com published on 29 July 2015.
30 June 31 December
2015 2014(1) 2014(1)
Rm Rm Rm
11.2 Total income by segment
RBB 23 723 22 609 46 242
CIB 6 500 6 211 12 779
WIMI 2 621 2 439 4 931
Head Office, Treasury and other operations (421) (575) (827)
32 423 30 684 63 125
Note
(1)Operational changes, management changes and associated changes to the way in which the CODM views the
performance of each business segment, have resulted in the reallocation of earnings, assets and liabilities
between operating segments. For details on business portfolio changes, refer to the interim financial results
booklet available on www.barclaysafrica.com published on 29 July 2015.
30 June 31 December
2015 2014(1) 2014(1)
Rm Rm Rm
11.3 Total internal income by segment
RBB (4 763) (4 796) (9 127)
CIB 666 1 431 1 512
WIMI (187) (209) (404)
Head Office, Treasury and other operations 4 284 3 574 8 019
- - -
Note
(1)Operational changes, management changes and associated changes to the way in which the CODM views the
performance of each business segment, have resulted in the reallocation of earnings, assets and liabilities
between operating segments. For details on business portfolio changes, refer to the interim financial results
booklet available on www.barclaysafrica.com published on 29 July 2015.
30 June 31 December
2015 2014(1) 2014(1)
Rm Rm Rm
11.4 Total assets by segment
RBB 790 026 740 200 774 546
CIB 487 410 453 766 477 529
WIMI 41 446 47 492 46 765
Head Office, Treasury and other operations (279 937) (262 757) (307 426)
1 038 945 978 701 991 414
Note
(1)Operational changes, management changes and associated changes to the way in which the CODM views the
performance of each business segment, have resulted in the reallocation of earnings, assets and liabilities
between operating segments. For details on business portfolio changes, refer to the interim financial results
booklet available on www.barclaysafrica.com published on 29 July 2015.
30 June 31 December
2015 2014(1) 2014(1)
Rm Rm Rm
11.5 Total liabilities by segment
RBB 770 374 723 124 752 935
CIB 479 535 446 198 466 489
WIMI 36 060 42 344 41 698
Head Office, Treasury and other operations (338 883) (319 247) (360 653)
947 086 892 419 900 469
Note
(1)Operational changes, management changes and associated changes to the way in which the CODM views the
performance of each business segment, have resulted in the reallocation of earnings, assets and liabilities
between operating segments. For details on business portfolio changes, refer to the interim financial results
booklet available on www.barclaysafrica.com published on 29 July 2015.
12. Assets and liabilities not held at fair value
The following table summarises the carrying amounts and fair values of those assets and
liabilities not held at fair value:
30 June
2015 2014(1)
Carrying Carrying
value Fair value value Fair value
Rm Rm Rm Rm
Financial assets
Balances with other central banks 7 382 7 382 8 406 8 406
Balances with the SARB 16 485 16 485 13 126 13 126
Coins and bank notes 9 833 9 833 8 496 8 496
Money market assets 24 24 38 38
Cash, cash balances and balances with central banks 33 724 33 724 30 066 30 066
Loans and advances to banks 68 051 68 051 76 192 76 192
Other assets 29 374 29 374 17 013 17 013
Retail Banking South Africa 371 890 371 355 363 326 363 326
Credit cards 36 703 36 703 35 010 35 010
Instalment credit agreements 72 921 72 296 67 174 67 174
Loans to associates and joint ventures 14 163 14 163 10 968 10 968
Mortgages 228 824 228 853 231 453 231 453
Other loans and advances 344 344 303 303
Overdrafts 2 442 2 442 2 262 2 262
Personal and term loans 16 493 16 554 16 156 16 156
Business Banking South Africa 63 219 63 246 60 325 60 325
Mortgages (including CPF) 30 200 30 227 29 719 29 719
Overdrafts 19 377 19 377 18 519 18 519
Term loans 13 642 13 642 12 087 12 087
RBB Rest of Africa 36 360 36 486 33 043 33 043
CIB 157 460 157 460 142 771 142 449
WIMI 5 117 5 117 5 361 5 361
Head Office, Treasury and other operations 2 799 2 799 49 49
Loans and advances to customers - net of impairment losses 636 845 636 463 604 875 604 553
Total assets 767 994 767 612 728 146 727 824
Financial liabilities
Deposits from banks 36 972 36 972 49 263 49 263
Other liabilities 29 722 29 719 24 480 24 480
Call deposits 61 269 61 269 64 204 64 204
Cheque account deposits 200 264 200 264 179 552 179 552
Credit card deposits 1 889 1 889 1 834 1 834
Fixed deposits 147 841 148 199 142 425 142 425
Foreign currency deposits 28 259 28 259 16 294 16 294
Notice deposits 48 706 48 713 50 999 50 999
Other deposits 9 818 9 818 10 911 10 911
Savings and transmission deposits 132 739 132 739 113 101 113 101
Deposits due to customers 630 785 631 150 579 320 579 320
Debt securities in issue 112 211 112 571 101 364 101 584
Borrowed funds 11 476 11 843 14 889 15 320
Total liabilities 821 166 822 255 769 316 769 967
Note
(1)Operational changes, management changes and associated changes to the way in which the CODM views the
performance of each business segment, have resulted in the reallocation of earnings, assets and liabilities
between operating segments. For details on business portfolio changes, refer to the interim financial results
booklet available on www.barclaysafrica.com published on 29 July 2015.
The table below summarises the carrying amounts and fair values of those assets and liabilities
not held at fair value:
31 December
2014(1)
Carrying
value Fair value
Rm Rm
Financial assets
Balances with other central banks 9 401 9 401
Balances with the SARB 12 621 12 621
Coins and bank notes 12 903 12 903
Money market assets 21 21
Cash, cash balances and balances with central banks 34 946 34 946
Investment securities 110 110
Loans and advances to banks 51 702 51 647
Other assets 12 835 13 124
Retail Banking South Africa 367 967 367 540
Credit cards 36 484 36 484
Instalment credit agreements 70 819 70 257
Loans to associates and joint ventures 13 012 13 012
Mortgages 229 023 229 067
Other loans and advances 410 410
Overdrafts 2 254 2 254
Personal and term loans 15 965 16 056
Business Banking South Africa 60 928 60 926
Mortgages (including CPF) 30 161 30 157
Overdrafts 18 148 18 128
Term loans 12 619 12 641
RBB Rest of Africa 35 812 35 812
CIB 154 620 154 228
WIMI 5 234 5 234
Head Office, Treasury and other operations 870 871
Loans and advances to customers - net of impairment losses 625 431 624 611
Total assets 725 024 724 438
Financial liabilities
Deposits from banks 36 476 37 816
Other liabilities 16 525 16 532
Call deposits 56 991 56 991
Cheque account deposits 186 932 186 932
Credit card deposits 1 932 1 932
Fixed deposits 145 623 146 349
Foreign currency deposits 24 976 24 976
Notice deposits 49 764 49 843
Other deposits 11 437 11 437
Savings and transmission deposits 128 025 128 025
Deposits due to customers 605 680 606 485
Debt securities in issue 100 986 101 351
Borrowed funds 11 208 11 559
Total liabilities 770 875 773 743
Note
(1)Operational changes, management changes and associated changes to the way in which the CODM views the
performance of each business segment, have resulted in the reallocation of earnings, assets and liabilities
between operating segments. For details on business portfolio changes, refer to the interim financial results
booklet available on www.barclaysafrica.com published on 29 July 2015.
13. Assets and liabilities held at fair value
13.1 Fair value measurement and valuation processes
Financial assets and financial liabilities
The Group has an established control framework with respect to the measurement of fair values. The
framework includes a Valuation Committee and an Independent Valuation Control team (“IVC”), which
is independent from the front office.
The Valuation Committee, which comprises representatives from senior management, will formally
approve valuation policies and any changes to valuation methodologies. Significant valuation issues
are reported to the Barclays Africa Group Audit and Compliance Committee.
The Valuation Committee is responsible for overseeing the valuation control process and will
therefore consider the appropriateness of valuation techniques and inputs for fair value measurement.
The IVC independently verifies the results of trading and investment operations and all significant
fair value measurements. They source independent data from external independent parties, as well
as internal risk areas when performing independent price verification for all financial instruments
held at fair value. They also assess and document the inputs obtained from external independent
sources to measure the fair value which supports conclusions that valuations are performed in
accordance with IFRS and internal valuation policies.
Investment properties
The fair value of investment properties is determined based on the most appropriate methodology
applicable to the specific property. Methodologies include the market comparable approach that
reflects recent transaction prices for similar properties, discounted cash flows and income
capitalisation methodologies. In estimating the fair value of the properties, the highest and
best use of the properties is taken into account.
Where possible the fair value of the Group’s investment properties is determined through
valuations performed by external independent valuators. When the Group’s internal valuations
are different to that of the external independent valuers, detailed procedures are performed
to substantiate the differences, whereby the IVC verifies the procedures performed by the front
office and considers the appropriateness of any differences to external independent valuations.
13.2 Fair value measurements
Valuation inputs
IFRS 13 requires an entity to classify fair values measured and/or disclosed according to a
hierarchy that reflects the significance of observable market inputs. The three levels of the fair
value hierarchy are defined as follows.
Quoted market prices - Level 1
Fair values are classified as Level 1 if they have been determined using observable prices in an
active market. Such fair values are determined with reference to unadjusted quoted prices for
identical assets or liabilities in active markets where the quoted price is readily available,
and the price represents actual and regularly occurring market transactions on an arm’s length basis.
An active market is one in which transactions occur with sufficient volume and frequency to provide
pricing information on an ongoing basis.
Valuation technique using observable inputs - Level 2
Fair values classified as Level 2 have been determined using models for which inputs are
observable in an active market.
A valuation input is considered observable if it can be directly observed from transactions in an
active market, or if there is compelling external evidence demonstrating an executable exit price.
Valuation technique using significant unobservable inputs - Level 3
Fair values are classified as Level 3 if their determination incorporates significant inputs that
are not based on observable market data (unobservable inputs). An input is deemed significant if
it is shown to contribute more than 10% to the fair value of an item. Unobservable input levels are
generally determined based on observable inputs of a similar nature, historical observations or other
analytical techniques.
Judgemental inputs on valuation of principal instruments
The following summary sets out the principal instruments whose valuation may involve judgemental
inputs:
Debt securities and treasury and other eligible bills
These instruments are valued, based on quoted market prices from an exchange, dealer, broker,
industry group or pricing service, where available. Where unavailable, fair value is determined by
reference to quoted market prices for similar instruments or, in the case of certain mortgage-backed
securities, valuation techniques using inputs derived from observable market data, and, where relevant,
assumptions in respect of unobservable inputs.
Equity instruments
Equity instruments are valued, based on quoted market prices from an exchange, dealer, broker,
industry group or pricing service, where available. Where unavailable, fair value is determined
by reference to quoted market prices for similar instruments or by using valuation techniques
using inputs derived from observable market data, and, where relevant, assumptions in respect
of unobservable inputs.
Also included in equity instruments are non-public investments, which include investments in
venture capital organisations. The fair value of these investments is determined using appropriate
valuation methodologies which, dependent on the nature of the investment, may include discounted
cash low analysis, enterprise value comparisons with similar companies and price:earnings comparisons.
For each investment, the relevant methodology is applied consistently over time.
Derivatives
Derivative contracts can be exchange-traded or traded Over The Counter (“OTC”) derivatives. OTC
derivative contracts include forward, swap and option contracts related to interest rates, bonds,
foreign currencies, credit spreads, equity prices and commodity prices or indices on these instruments.
Fair values of derivatives are obtained from quoted market prices, dealer price quotations, discounted
cash flow and option pricing models.
Loans and advances
The disclosed fair value of loans and advances to banks and customers is determined by discounting
contractual cash flows. Discount factors are determined using the relevant forward base rates (as
at valuation date) plus the originally priced spread. Where a significant change in credit risk
has occurred, an updated spread is used to reflect valuation date pricing. Behavioural cash flow
profiles, instead of contractual cash flow profiles, are used to determine expected cash flows where
contractual cash flow profiles would provide an inaccurate fair value.
Deposits, debt securities in issue and borrowed funds
Deposits, debt securities in issue and borrowed funds are valued using discounted cash flow
models, applying rates currently offered for issuances with similar characteristics. Where these
instruments include embedded derivatives, the embedded derivative component is valued using the
methodology for derivatives.
The fair value of amortised cost deposits repayable on demand is considered to be equal to
their carrying value. For other financial liabilities at amortised cost the disclosed fair value
approximates the carrying value because the instruments are short-term in nature or have interest
rates that reprice frequently.
13.3 Fair value adjustments
The main valuation adjustments required to arrive at a fair value are described as follows:
Bid-offer valuation adjustments
For assets and liabilities where the Group is not a market maker, mid-prices are adjusted to bid
and offer prices respectively unless the relevant mid-prices are reflective of the appropriate exit
price as a practical expedient given the nature of the underlying instruments. Bid-offer adjustments
reflect expected close out strategy and, for derivatives, the fact that they are managed on a
portfolio basis. The methodology for determining the bid-offer adjustment for a derivative portfolio
will generally involve netting between long and short positions and the bucketing of risk by strike
and term in accordance with hedging strategy. Bid-offer levels are derived from market sources, such
as broker data. For those assets and liabilities where the Group is a market maker and has the ability
to transact at, or better than, mid-price (which is the case for certain equity, bond and vanilla
derivative markets), the mid-price is used, since the bid-offer spread does not represent a
transaction cost.
Uncollateralised derivative adjustments
A fair value adjustment is incorporated into uncollateralised derivative valuations to reflect
the impact on fair value of counterparty credit risk, as well as the cost of funding across all
asset classes.
Model valuation adjustments
Valuation models are reviewed under the Group’s model governance framework. This process identifies
the assumptions used and any model limitations (for example, if the model does not incorporate
volatility skew). Where necessary, fair value adjustments will be applied to take these factors
into account. Model valuation adjustments are dependent on the size of the portfolio, complexity
of the model, whether the model is market standard and to what extent it incorporates all known
risk factors. All models and model valuation adjustments are subject to review on at least an
annual basis.
13.4 Fair value hierarchy
The following table shows the Group’s assets and liabilities that are recognised and subsequently
measured at fair value and are analysed by valuation techniques. The classification of assets and
liabilities is based on the lowest level input that is significant to the fair value measurement
in its entirety.
30 June
2015 2014
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Recurring fair value measurements Rm Rm Rm Rm Rm Rm Rm Rm
Financial assets
Cash, cash balances and balances with central banks 4 121 7 069 1 310 12 500 6 350 8 173 - 14 523
Investment securities 55 589 19 229 4 148 78 966 69 293 9 285 3 949 82 527
Loans and advances to banks - 25 484 - 25 484 - 11 062 - 11 062
Trading and hedging portfolio assets 32 841 55 589 1 278 89 708 31 645 54 429 1 175 87 249
Debt instruments 18 390 9 537 872 28 799 20 855 4 397 870 26 122
Derivative assets 491 40 032 406 40 929 62 45 293 305 45 660
Commodity derivatives - 168 - 168 53 309 - 362
Credit derivatives - 224 111 335 - 230 48 278
Equity derivatives 12 1 491 45 1 548 9 1 334 - 1 343
Foreign exchange derivatives 114 7 197 10 7 321 - 7 982 4 7 986
Interest rate derivatives 365 30 952 240 31 557 - 35 438 253 35 691
Equity instruments 13 845 - - 13 845 10 728 81 - 10 809
Money market assets 115 6 020 - 6 135 - 4 658 - 4 658
Other assets - 5 25 30 30 6 16 52
Loans and advances to customers 3 19 839 725 20 567 5 5 236 5 424 10 665
Investments linked to investment contracts 16 550 2 475 - 19 025 18 474 2 501 - 20 975
Total financial assets 109 104 129 690 7 486 246 280 125 797 90 692 10 564 227 053
Financial liabilities
Deposits from banks - 14 062 7 14 069 - 15 505 - 15 505
Trading and hedging portfolio liabilities 7 787 42 548 421 50 756 5 460 42 751 456 48 667
Derivative liabilities 32 42 548 421 43 001 340 42 751 456 43 547
Commodity derivatives - 186 - 186 30 261 - 291
Credit derivatives - 146 129 275 - 214 39 253
Equity derivatives - 2 419 184 2 603 - 1 690 318 2 008
Foreign exchange derivatives 32 6 545 7 6 584 308 4 458 2 4 768
Interest rate derivatives - 33 252 101 33 353 2 36 128 97 36 227
Short positions 7 755 - - 7 755 5 120 - - 5 120
Other liabilities - 11 10 21 30 28 - 58
Deposits due to customers 93 7 659 10 689 18 441 68 12 833 6 232 19 133
Debt securities in issue 2 5 265 2 066 7 333 59 4 067 19 4 145
Liabilities under investment contracts - 20 426 2 280 22 706 - 24 700 - 24 700
Total financial liabilities 7 882 89 971 15 473 113 326 5 617 99 884 6 707 112 208
Non-financial assets
Commodities 1 824 - - 1 824 1 840 - - 1 840
Investment properties - - 751 751 - - 778 778
Non-recurring fair value measurements
Non-current assets held for sale(1) - - 949 949 - - 1 290 1 290
Non-current liabilities held for sale(1) - - 468 468 - - 504 504
Note
(1)Includes certain items classified in terms of the requirements of IFRS 5 which are measured in
terms of their respective standards.
Condensed notes to the consolidated financial results
for the reporting period ended 31 December
31 December
2014
Level 1 Level 2 Level 3 Total
Recurring fair value measurements Rm Rm Rm Rm
Financial assets
Cash, cash balances and balances with central banks 4 327 9 730 1 332 15 389
Investment securities 55 402 25 239 5 135 85 776
Loans and advances to banks - 20 523 - 20 523
Trading and hedging portfolio assets 34 658 55 327 1 162 91 147
Debt instruments 24 459 6 221 870 31 550
Derivative assets 5 42 367 292 42 664
Commodity derivatives 2 313 - 315
Credit derivatives - 284 91 375
Equity derivatives 3 1 018 29 1 050
Foreign exchange derivatives - 8 378 12 8 390
Interest rate derivatives - 32 374 160 32 534
Equity instruments 9 591 321 - 9 912
Money market assets 603 6 418 - 7 021
Other assets 7 1 17 25
Loans and advances to customers 4 6 160 4 731 10 895
Investments linked to investment contracts 17 014 2 302 1 19 317
Total financial assets 111 412 119 282 12 378 243 072
Financial liabilities
Deposits from banks 7 928 16 501 - 16 501
Trading and hedging portfolio liabilities - 44 101 320 52 349
Derivative liabilities - 44 101 320 44 421
Commodity derivatives - 268 - 268
Credit derivatives - 352 39 391
Equity derivatives - 1 297 198 1 495
Foreign exchange derivatives - 10 001 7 10 008
Interest rate derivatives - 32 183 76 32 259
Short positions 7 928 - - 7 928
Other liabilities - 23 28 51
Deposits due to customers 80 13 596 5 530 19 206
Debt securities in issue 179 4 891 42 5 112
Liabilities under investment contracts - 20 277 3 022 23 299
Total financial liabilities 8 187 99 389 8 942 116 518
Non-financial assets
Commodities 1 701 - - 1 701
Investment properties - - 727 727
Non-recurring fair value measurements
Non-current assets held for sale(1) - - 972 972
Non-current liabilities held for sale(1) - - 372 372
Note
(1)Includes certain items classified in terms of the requirements of IFRS 5 which are measured in
terms of their respective standards.
13.5 Measurement of assets and liabilities categorised at Level 2
The following table presents information about the valuation techniques and significant observable
inputs used in measuring assets and liabilities categorised as Level 2 in the fair value hierarchy:
Category of asset/liability Valuation techniques applied Significant observable inputs
Cash, cash balances and balances with Discounted cash flow models Underlying price of market traded instruments
central banks and/or interest rates
Loans and advances to banks Discounted cash flow models Interest rate and/or money market curves
Trading and hedging portfolio assets
and liabilities
Debt instruments Discounted cash flow models Underlying price of market traded instruments
and/or interest rates
Derivative assets
Commodity derivatives Discounted cash flow model, option pricing, Spot price of physical or futures,
futures pricing and/or Exchange Traded Fund interest rates and/or volatility
(“ETF”) models
Credit derivatives Discounted cash flow and/or credit Interest rate, recovery rate, credit spread and/or
default swap (hazard rate) models quanto ratio
Equity derivatives Discounted cash flow, option pricing and/or Spot price, interest rate, volatility and/or
futures pricing models dividend stream
Foreign exchange derivatives Discounted cash flow and/or option pricing Spot price, interest rate and/or volatility
models
Interest rate derivatives Discounted cash flow and/or option pricing Interest rate curves, repurchase agreement
models curves, money market curves and/or volatility
Equity instruments Net asset value Underlying price of market traded instruments
Money market assets Discounted cash flow models Money market rates and/or interest rates
Loans and advances to customers Discounted cash flow models Interest rate and/or money market curves
Investment securities and investments linked Listed equity: bid price. Other items: discounted Underlying price of the market traded
to investment contracts cash flow models instrument
Deposits from banks Discounted cash flow models Interest rate curves and/or money market curves
Deposits due to customers Discounted cash flow models Interest rate curves and/or money market curves
Debt securities in issue and other liabilities Discounted cash flow models Underlying price of the market traded instrument
and/or interest rate curves
13.6 Reconciliation of Level 3 assets and liabilities
A reconciliation of the opening balances to closing balances for all movements on Level 3 assets
and liabilities is set out below:
30 June
2015
Trading and
Cash hedging Loans and
and cash portfolio Other advances to Investment Investment Total assets
balances assets assets(1) customers securities properties at fair value
Rm Rm Rm Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 1 332 1 162 18 4 731 5 135 727 13 105
Net interest income - - - - 38 - 38
Gains and losses from banking and trading activities - - - (16) - - (16)
Gains and losses from investment activities - - 1 - 67 23 91
Purchases - 132 6 - 296 2 436
Sales (22) (4) - (3 990) (1 388) (1) (5 405)
Movement in other comprehensive income - - - - - - -
Settlements - - - - - - -
Transferred to/(from) assets(2) - - - - - - -
Movement in/(out) of Level 3 - (12) - - - - (12)
Closing balance at the end of the reporting period 1 310 1 278 25 725 4 148 751 8 237
Notes
(1)Includes investments linked to investment contracts.
(2)Transfer to non-current assets held for sale (Refer to note 1).
30 June
2014
Trading and
Cash hedging Loans and
and cash portfolio Other advances to Investment Investment Total assets
balances assets assets(1) customers securities properties at fair value
Rm Rm Rm Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 1 933 1 037 23 6 477 4 688 1 089 15 247
Net interest income - - - 58 33 - 91
Gains and losses from banking and trading activities - 88 - - - - 88
Gains and losses from investment activities - - - - (30) (8) (38)
Purchases - 4 - 285 28 11 328
Sales - - (7) - (770) (2) (779)
Movement in other comprehensive income - - - - - - -
Settlements (1 933) - - (1 396) - - (3 329)
Transferred to/(from) assets(2) - 6 - - - (312) (306)
Movement in/(out) of Level 3 - 40 - - - - 40
Closing balance at the end of the reporting period - 1 175 16 5 424 3 949 778 11 342
Notes
(1)Includes investments linked to investment contracts.
(2)Transfer to non-current assets held for sale.
A reconciliation of the opening balances to closing balances for all movements on Level 3 assets
and liabilities is set out below:
31 December
2014
Trading and
Cash hedging Loans and
and cash portfolio Other advances to Investment Investment Total assets
balances assets assets(1) customers securities properties at fair value
Rm Rm Rm Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 1 933 1 037 23 6 477 4 688 1 089 15 247
Net interest income - - 1 373 69 - 443
Gains and losses from banking and trading activities - 179 - (29) 136 - 286
Gains and losses from investment activities - - - 2 (2) 6 6
Purchases 1 332 - - 143 1 086 11 2 572
Sales - (32) (6) (620) (863) (3) (1 524)
Movement in other comprehensive income - - - - 5 - 5
Settlements (1 933) - - (1 615) - - (3 548)
Transferred to/(from) assets(2) - - - - - (376) (376)
Movement in/(out) of Level 3 - (22) - - 16 - (6)
Closing balance at the end of the reporting period 1 332 1 162 18 4 731 5 135 727 13 105
Notes
(1)Includes investments linked to investment contracts.
(2)Transfer to non-current assets held for sale.
30 June
2015
Trading and Liabilities
hedging Debt under Total
portfolio Other Deposits due securities investment liabilities
liabilities liabilities to customers in issue contracts at fair value
Rm Rm Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 320 28 5 530 42 3 022 8 942
Movement in other comprehensive income - - - - - -
Net interest income - - - - - -
Gains and losses from banking and trading activities 148 - 282 (168) - 262
Gains and losses from investment activities - - - - (742) (742)
Purchases - - - - - -
Sales - (18) - - - (18)
Issue/(settlements) (5) - 4 877 2 192 - 7 064
Movement in/(out) of Level 3 (42) - - - - (42)
Closing balance at the end of the reporting period 421 10 10 689 2 066 2 280 15 466
30 June
2014
Trading and Liabilities
hedging Debt under Total
portfolio Other Deposits due securities investment liabilities
liabilities liabilities to customers in issue contracts at fair value
Rm Rm Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 549 - 7 138 35 - 7 722
Movement in other comprehensive income - - - - - -
Net interest income - - 10 - - 10
Gains and losses from banking and trading activities (114) - (217) - - (331)
Gains and losses from investment activities - - - - - -
Purchases - - - - - -
Sales - - - - - -
Settlements - - (699) (16) - (715)
Movement in/(out) of Level 3 21 - - - - 21
Closing balance at the end of the reporting period 456 - 6 232 19 - 6 707
31 December
2014
Trading and Liabilities
hedging Debt under Total
portfolio Other Deposits due securities investment liabilities
liabilities liabilities to customers in issue contracts at fair value
Rm Rm Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 549 - 7 138 35 - 7 722
Movement in other comprehensive income (8) - - - - (8)
Net interest income - - 1 1 - 2
Gains and losses from banking and trading activities (62) - (1 501) 6 - (1 557)
Gains and losses from investment activities - - - - - -
Purchases - 28 - - 3 022 3 050
Sales (75) - - - - (75)
Settlements - - (81) - - (81)
Movement in/(out) of Level 3 (84) - (27) - - (111)
Closing balance at the end of the reporting period 320 28 5 530 42 3 022 8 942
13.6.1 Significant transfers between levels
During the previous reporting period, it was determined that significant transfers between levels
of the assets and liabilities held at fair value occurred. Treasury bills of R18,5bn were
transferred from level 1 to level 2, as these are held in an inactive market.
13.7 Unrealised gains and losses on Level 3 assets and liabilities
The total unrealised gains and losses for the reporting period on Level 3 positions held at the
reporting date are set out below:
30 June
2015
Trading and Investments
hedging Loans and linked to Non-current
portfolio Other advances to Investment investment assets held Total assets
assets assets customers securities contracts for sale at fair value
Rm Rm Rm Rm Rm Rm Rm
Gains and losses from banking and trading activities 146 - (28) - - - 118
30 June
2014
Trading and Investments
hedging Loans and linked to Non-current
portfolio Other advances to Investment investment assets held Total assets
assets assets customers securities contracts for sale at fair value
Rm Rm Rm Rm Rm Rm Rm
Gains and losses from banking and trading activities 60 - (188) - - - (128)
31 December
2014
Trading and Investments
hedging Loans and linked to Non-current
portfolio Other advances to Investment investment assets held Total assets
assets assets customers securities contracts for sale at fair value
Rm Rm Rm Rm Rm Rm Rm
Gains and losses from banking and trading activities 79 - (28) - - - 51
30 June
2015
Trading and Liabilities
hedging Debt under Total
portfolio Other Deposits due securities investment liabilities at
liabilities liabilities to customers in issue contracts fair value
Rm Rm Rm Rm Rm Rm
Gains and losses from banking and trading activities - - - - - -
30 June
2014
Trading and Liabilities
hedging Debt under Total
portfolio Other Deposits due securities investment liabilities at
liabilities liabilities to customers in issue contracts fair value
Rm Rm Rm Rm Rm Rm
Gains and losses from banking and trading activities (23) - - - - (23)
31 December
2014
Trading and Liabilities
hedging Debt under Total
portfolio Other Deposits due securities investment liabilities at
liabilities liabilities to customers in issue contracts fair value
Rm Rm Rm Rm Rm Rm
Gains and losses from banking and trading activities 116 - - - - 116
13.8 Sensitivity analysis of valuations using unobservable inputs
As part of the Group’s risk management processes, stress tests are applied on the significant
unobservable parameters to generate a range of potentially possible alternative valuations. The
assets and liabilities that most impact this sensitivity analysis are those with the more illiquid
and/or structured portfolios. The stresses are applied independently and do not take account of any
cross correlation between separate asset classes that would reduce the overall effect on the valuations.
The following table reflects how the unobservable parameters were changed in order to evaluate the
sensitivities of Level 3 financial assets and liabilities:
Significant unobservable parameter Positive/(negative) variance applied to parameters
Credit spreads 100/(100) bps
Volatilities 10/(10)%
Basis curves 100/(100) bps
Yield curves and repo curves 100/(100) bps
Future earnings and marketability discount 15/(15)%
Funding spreads 100/(100) bps
A significant parameter has been deemed to be one which may result in a charge to the profit or
loss, or a change in the fair value asset or liability of more than 10% or the underlying value
of the affected item. This is demonstrated by the following sensitivity analysis which includes
a reasonable range of possible outcomes:
30 June
2015
Potential effect recorded Potential effect recorded
in profit or loss directly in equity
Significant Favourable/Unfavourable Favourable/Unfavourable
unobservable parameters Rm Rm
Deposits due to customers Yield curves -/- -/-
Investment securities Yield curves, future earnings
and marketability discount,
comparator multiples 378/378 (5)/4
Loans and advances to customers Volatility, credit spreads,
yield curves, discount rates 2/2 -/-
Other assets Volatility, credit spreads 3/3 -/-
Trading and hedging portfolio assets Volatility, credit spreads -/- -/-
Trading and hedging portfolio liabilities Credit spreads -/- -/-
383/383 (5)/4
30 June
2014
Potential effect recorded Potential effect recorded
in profit or loss directly in equity
Significant Favourable/Unfavourable Favourable/Unfavourable
unobservable parameters Rm Rm
Deposits due to customers Yield curves -/- -/-
Investment properties Selling price per unit, 80/80 -/-
selling price escalations,
rental income per unit, rental
escalations per year, expense
ratios, vacancy rate, income
capitalisation rate and risk
client rates
Investment securities Yield curves, future earnings 1 272/1 273 (5)/4
and marketability discount,
comparator multiples
Loans and advances to customers Volatility, credit spreads, 71/80 -/-
yield curves, discount rates
Other assets Volatility, credit spreads 2/2 -/-
Trading and hedging portfolio assets Volatility, credit spreads -/- -/-
Trading and hedging portfolio liabilities Credit spreads 21/4 -/-
1 446/1 439 (5)/4
31 December
2014
Potential effect recorded Potential effect recorded
in profit or loss directly in equity
Significant Favourable/Unfavourable Favourable/Unfavourable
unobservable parameters Rm Rm
Deposits due to customers BAGL/Absa funding spread -/- -/-
Investment securities and investments linked to Yield curves, future earnings
investment contracts and marketability discount,
comparator multiples 672/126 -/-
Loans and advances to customers Credit spreads 1 037/23 -/-
Other assets Volatility, credit spreads 3/3 -/-
Trading and hedging portfolio assets Volatility, credit spreads, basis
curves, yield curves, repo
curves, funding spreads -/- -/-
Trading and hedging portfolio liabilities Volatility, credit spreads, basis
curves, yield curves, repo
curves, funding spreads 34/34 -/-
Other liabilities Volatility, credit spreads 28/28 -/-
1 774/214 -/-
13.9 Measurement of assets and liabilities at Level 3
The following table presents information about the valuation techniques and significant
unobservable inputs used in measuring assets and liabilities categorised as Level 3 in
the fair value hierarchy:
June December
2015 2014 2014
Category of asset/ Valuation techniques Significant Range of estimates utilised
liability applied unobservable inputs for the unobservable inputs
Loans and advances Discounted cash flow and/ Credit spreads 0,96% to 3,99% Credit spreads vary 0,96% to 3,99%
to customers or dividend yield models between 1,35% and
7,5%
Investment securities Discounted cash flow Risk adjusted yield Discount rates Discount rates Discount rates
and investments models, third-party curves, future earnings, between 9,7% and between 9,7% between 9,7% and
linked to investment valuations, earnings marketability discounts 18%, comparator and 18%, multiples 18%, comparator
contracts multiples and/or income and/or comparator multiples between between multiples between
capitalisation valuations multiples 5,5 and 6,1 5,5 and 6,1 5,5 and 6,1
Trading and hedging
portfolio assets and
liabilities
Debt instruments Discounted cash flow Credit spreads 0,9% to 3,5% 0,9% to 3,5% 0,9% to 3,5%
models
Derivative assets
Credit derivatives Discounted cash flow and/ Credit spreads, recovery 0% to 23,58% 0% to 3,5% 0% to 13,45%
or credit default swap rates and/or quanto ratio
(hazard rate) models
Equity derivatives Discounted cash flow, Volatility and/or dividend 15,15% to 46,80% 16,9% to 37,2% 18,16% to 48,20%
option pricing and/or streams (greater than
futures pricing models 3 years)
Foreign exchange Discounted cash flow and/ African basis curves -10,00% to 13,95% -2,5% to 1,7% -10,74% to 6,53%
derivatives or option pricing models (greater than 1 year)
Interest rate Discounted cash flow and/ Real yield curves (less -2,59% to 2,47% -1,5% to 8,3% -1,56% to 10,04%
derivatives or option pricing models than 2 years)
Deposits due to Discounted cash flow Barclays Africa Group 0,85% to 1,2% 0,85% to 1,2% 0,85% to 1,2%
customers models Limited’s funding
spreads (greater than
5 years)
Debt securities in Discounted cash flow ZAR-MM-Funding 1,44% to 1,70% 10 to 20 bps 1,28% to 1,38%
issue models (greater than 5 years)
Investment Discounted cash flow Estimates of periods in 2 to 7 years 2 to 7 years 2 to 7 years
properties models which rental units will be
disposed of
Annual selling price 0% to 6% 0% to 6% 0% to 6%
escalations
Annual rental escalations 0% to 10% 0% to 10% 0% to 10%
Expense ratios 22% to 75% 22% to 75% 22% to 75%
Vacancy rates 2% to 15% 2% to 15% 2% to 15%
Income capitalisation 10% to 12% 10% to 12% 10% to 12%
rates
Risk adjusted discount 14% to 16% 14% to 16% 14% to 16%
rates
For assets or liabilities held at amortised cost and disclosed in levels 2 or 3 of the fair value
hierarchy, the discounted cash flow valuation technique is used. Interest rates and money market
curves are considered unobservable inputs for items which mature after five years. However, if the
items mature in less than five years, these inputs are considered observable.
For debt securities in issue held at amortised cost, a further significant input would be the
underlying price of the market traded instrument.
The sensitivity of the fair value measure is dependent on the unobservable inputs. Significant
changes to the unobservable inputs in isolation will have either a positive or negative impact on
fair values.
13.10 Unrecognised gains/(losses) as a result of the use of valuation models using unobservable inputs
The amount that has yet to be recognised in the statement of comprehensive income that relates to the
difference between the transaction price and the amount that would have arisen had valuation models
using unobservable inputs been used on initial recognition, less amounts subsequently recognised,
is as follows:
30 June 31 December
2015 2014 2014
Rm Rm Rm
Opening balance at the beginning of the reporting period (52) (55) (55)
New transactions (83) (4) (23)
Amounts recognised in profit and loss during the reporting period 28 15 26
Closing balance at the end of the reporting period (107) (44) (52)
13.11 Third-party credit enhancements
There were no significant liabilities measured at fair value and issued with inseparable
third-party credit enhancements.
14. Reporting changes overview
The financial reporting changes that have had an impact on the Group’s results for the
comparative interim reporting period ended 30 June 2014 include:
• The implementation of amended IFRS, specifically amendments to IAS 32, relating to
offsetting of financial assets and financial liabilities. All other amendments to IFRS,
and new interpretations,effective for the current reporting period had no significant
impact on the Group’s reported results.
• Certain changes in internal reclassifications.
14.1 Accounting policy changes due to amended IFRS
The amendments to IAS 32 provide further application guidance on when the criteria for offsetting
would be considered to be met and became effective for reporting periods beginning on or after
1 January 2014.
The offsetting requirements in IAS 32 have been retained such that a financial asset and liability
shall be offset and the net amount presented in the statement of financial position, only when an
entity currently has a legally enforceable right to set off the recognised amounts, and intends
either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
The amendments to IAS 32 provide more application guidance on when the criteria for offsetting would
be considered to be met.
The netting applied to certain financial instruments (i.e. variation margins on certain
derivatives as well as certain hybrid customer products) has been assessed in light of the amendments
and it has been determined that netting is no longer permitted under IFRS.
14.2 Internal reclassification changes
The Group elected to make an internal reclassification change involving the classification of
items in the statement of financial position. Investment securities across South Africa have been
appropriately grouped together as “Investment securities”, following the acquisition of Barclays
Africa Limited, with remaining investments linked to investment contracts being disclosed separately.
This has resulted in the old “statutory liquid asset portfolio” line item in the statement of
financial position no longer being displayed.
This reclassification has no impact on the overall financial position or net earnings of the
Group. To ensure comparability, the comparative reporting periods have been restated.
14.3 Impact of reporting changes on the Group’s results
The impact of these changes on the statement of financial position is as follows:
Condensed consolidated statement of financial position as at 30 June 2014
IFRS
As accounting Internal
previously policy reclassification
reported changes changes Restated
Rm(1) Rm Rm Rm
Assets
Statutory liquid asset portfolio 63 589 - (63 589) -
Investment securities 39 913 - 42 614 82 527
Investments linked to investment contracts - - 20 975 20 975
Loans and advances to customers 614 642 898 - 615 540
Liabilities
Deposits due to customers 597 555 898 - 598 453
Note
(1)As per financial results published on 30 July 2014.
Administration and contact details
Barclays Africa Group Limited Registered office
Incorporated in the Republic of South Africa 7th Floor, Barclays Towers West
Registration number: 1986/003934/06 15 Troye Street, Johannesburg, 2001
Authorised financial services and registered credit provider (NCRCP7) PO Box 7735, Johannesburg, 2000
JSE share code: BGA Switchboard: +27 11 350 4000
ISIN: ZAE000174124 barclaysafrica.com
Board of directors Queries
Group independent non-executive directors Please direct investor relations and annual report queries to
C Beggs, Y Z Cuba, A B Darko1, M J Husain, P B Matlare, groupinvestorrelations@barclaysafrica.com
T S Munday (Lead Independent Director), F Okomo-Okello2 Please direct media queries to groupmedia@barclaysafrica.com
For all customer and client queries, please go to the relevant country
Group non-executive directors website (see details below) for the local customer contact information
P A Clackson3, W E Lucas-Bull (Group Chairman), M S Merson3, Please direct queries relating to your Barclays Africa Group shares to
A V Vaswani4 questions@computershare.co.za
Please direct other queries regarding the Group to
Group executive directors groupsec@barclaysafrica.com
D W P Hodnett (Deputy Chief Executive Officer and Financial Director),
M Ramos (Chief Executive Officer)
Head of Investor Relations Transfer secretary
Alan Hartdegen Computershare Investor Services (Pty) Ltd
Telephone: +27 11 350 2598 Telephone: +27 11 370 5000
computershare.com/za/
Group Company Secretary
Nadine Drutman ADR depositary
Telephone: +27 11 350 5347 BNY Mellon
Telephone: +1 212 815 2248
bnymellon.com
Head of Finance
Jason Quinn
Telephone: +27 11 350 7565
Auditors Sponsors
Ernst & Young Inc. Lead independent sponsor
Telephone: +27 011 772 3000 J. P. Morgan Equities South Africa (Pty) Ltd
ey.com/ZA/en/Home Telephone: +27 11 507 0300
jpmorgan.com/pages/jpmorgan/emea/local/za
PricewaterhouseCoopers Inc. Joint sponsor
Telephone: +27 011 797 4000 Absa Bank Limited (Corporate and Investment Bank)
pwc.co.za Telephone: +27 11 895 6843
E-mail: equitysponsor@absacapital.com
Significant banking subsidiaries
Information on the entity and the products and services provided (including banking, insurance and investments) can be found at:
Absa Bank Limited absa.co.za Barclays Bank (Seychelles) Limited barclays.sc
Barclays Bank Botswana barclays.co.bw Barclays Bank Tanzania Limited barclays.co.tz
Barclays Bank of Ghana Limited gh.barclays.com/ Barclays Bank of Uganda Limited barclays.co.ug
Barclays Bank of Kenya barclays.co.ke Barclays Bank Zambia plc zm.barclays.com/
Barclays Bank Mauritius Limited barclays.mu National Bank of Commerce Ltd nbctz.com
Barclays Bank Mozambique SA barclays.co.mz/eng
Representative offices
Absa Namibia Proprietary Limited absanamibia.com.na
Absa Capital Representative Office Nigeria Limited cib.absa.co.za
While not members of the Barclays Africa Group Limited legal entity, these operations are managed by us
Barclays Bank Egypt S.A.E barclays.com.eg
Barclays Bank of Zimbabwe Limited zw.barclays.com/
Notes
(1)Ghanaian, (2)Kenyan, (3)British, (4)Singaporean.
Date: 29/07/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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